Making decisions, selecting between alternatives or allocating resources among alternatives, particularly between complex alternatives with multiple different aspects and considerations, can be extremely difficult. This can be particularly so for individuals that are not knowledgeable in the field or endeavor involving the different alternatives. One such field is investing. Selecting between or allocating resources among different investment alternatives and financial advisors or managers has become especially difficult and making a good decision or selection has never been more important. Investments can range from something as simple as a certificate of deposit (CD) to something as complex as a specialty derivative financial instrument. The number of different investment opportunities is staggering including well over 25,000 mutual funds alone offered worldwide. An investment professional may make the decision seem easier but there are over 500,000 financial advisors with varying experience and expertise and employed in different capacities, such as financial planners, financial consultants, stock brokers, insurance agents and the like to name a few such titles. While many investors may use an investment professional to assist in making investment decisions or selections, there are millions of investors who are struggling to make these decisions on their own with little or no assistance. Probably the largest group of non-assisted investors is in the 401(k) market where there are now more than 40 million accounts. Besides an individual's personal residence, a 401(k) plan is often the largest investment an individual may have, yet these decisions are often made with little background knowledge and minimal if any information about the different investment alternatives or fund managers.
Another problem that arises in the investment decision process is that little if any consideration may be given to personal considerations, such as risk tolerance of the individual investor, and what weight to apply to such considerations versus other preferences in the overall selection process. Often only a rough estimate of the investor's risk tolerance may be determined. For example, the investor may be asked if he considers himself to be a conservative, moderate or aggressive investor without any parameters or empirical information for the investor to accurately determine in which category he may actually fall. These types of questions may also be too superficial to obtain an accurate measure of an investor's risk tolerance. Additionally, these types of questions do not produce any quantifiable risk tolerance measure that can be used to rank the alternatives based on the calculated risk tolerance specific for the particular investor.